Federal Solar Tax Credit Update 2025

If you've been considering going solar, 2025 is the year to act. The federal Residential Clean Energy Credit, commonly known as the solar tax credit, is available at 30% through the end of this year. Starting January 1, 2026, this credit will no longer be available for homeowners. That means if you want to maximize your savings, now is the time to install your solar system.

What Is the Solar Tax Credit?

The Residential Clean Energy Credit allows homeowners to deduct 30% of the cost of installing solar panels, battery storage, and other qualified clean energy systems from their federal taxes. This includes expenses like:

• Solar panels and inverters
• Battery storage systems
• Installation labor
• Permitting and inspection fees
• Sales tax on equipment

This credit applies to systems installed between 2022 and 2032. However, after 2025, the credit will decrease to 26% in 2033 and 22% in 2034. By 2035, the credit will be eliminated entirely for residential installations.

Why 2025 Is the Best Time to Go Solar

With the 30% tax credit set to expire at the end of this year, homeowners have a limited window to take advantage of significant savings. For an average solar installation costing around $30,000, this translates to a $9,000 federal tax credit. After December 31, 2025, that benefit will be gone entirely.

Additionally, the "One Big Beautiful Bill" signed into law on July 4, 2025, accelerates the phase-out of clean energy incentives, including the solar tax credit. This legislation eliminates the 30% credit for homeowners starting in 2026.

Top Solar Providers to Consider

When choosing a solar provider, it's essential to consider factors like customer satisfaction, equipment quality, and installation expertise. Here are three top-rated solar companies in 2025:

1. Sunrun

Sunrun is America's leading provider of clean energy as a subscription service, with over 1 million homes installed. They offer a variety of financing options, including $0-down leases and loans, making solar more accessible. Sunrun installs top-tier panel brands like REC, QCells, SolarEdge, and Canadian Solar, allowing homeowners to choose based on price, performance, or other preferences.

2. ION Solar

ION Solar is known for its high customer satisfaction, with an average rating of 4.9 out of 5 stars. They provide customized solar solutions and have a strong presence in the residential solar market. ION Solar's commitment to quality and customer service makes it a reliable choice for homeowners looking to go solar.

3. Solar Optimum

Solar Optimum specializes in American-made solar panels, inverters, racking, and battery storage, ensuring exceptional quality and performance. As the #1 solar and battery storage installer in the U.S., they offer industry-leading experience and a commitment to customer satisfaction.

How to Claim the Tax Credit

To qualify for the 30% solar tax credit:

• Install a Qualified System: Ensure your solar system meets all federal requirements.
• Own the System: Leasing does not qualify for the tax credit; you must own the system.
• File IRS Form 5695: Include this form with your federal tax return to claim the credit.

It's important to note that the credit is nonrefundable. This means if your tax liability is less than the credit amount, you won't receive the difference as a refund. However, you can carry over any unused portion of the credit to future tax years.

Final Thoughts

With the federal solar tax credit set to expire at the end of 2025, now is the optimal time to invest in solar energy for your home. Not only can you significantly reduce your energy bills, but you can also take advantage of substantial federal savings before they're gone.

If you're ready to explore solar options, consider reaching out to reputable providers like Sunrun, ION Solar, or Solar Optimum. These companies offer a range of solutions to fit your needs and budget, ensuring you can make the most of the available incentives.

Don't wait. Act now to secure your 30% federal tax credit and start enjoying the benefits of clean, renewable energy.